10202017Headline:

Los Angeles, California

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Paul Kiesel
Paul Kiesel
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Countrywide Mortgage Modification to Help 125,000 Struggling Californians

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Bank of America, which purchased Countrywide Financial over the summer, will help almost 125,000 Californians who are struggling with pay option arm loans originated by Countrywide.

The move that was announced by Bank of America yesterday could save mortgage holders billions of dollars and could also keep over 400,000 borrowers nationwide in their homes. Countrywide’s owner (B of A) agreed to the nation’s largest loan-modification program to settle charges of lending abuse (TILA violations) brought by California and other states like Illinois and Connecticut.

The program may reduce borrowers’ payments made to Countrywide and provide other benefits that are being estimated at $9 billion nationwide. It has not been determined if the program will switch customers to fixed-rate loans, reduce the interest or principal of the loan or use a method that samples all of the above.

The plan allows for a foreclosure freeze for most borrowers (borrowers that are likely to be helped by the loan modification program and who would qualify under its criteria) until Countrywide determines the borrowers’ eligibility.

However, not all loans will be saved, as bank officials were cognizant that some borrowers were so far underwater that investors who own the loans, who purchased the loans via mortgage-backed securities, would have to cooperate, and this appears unlikely. So far investors have been inexorable in not participating in any modification programs as the one proposed yesterday, as they are also trying to get their own money back from Countrywide.

California Attorney General Jerry Brown will announce and detail the value of Countrywide’s anticipated $3.5 billion loan modification program today that will help California homeowners who took out these adjustable-rate loans from 2004-2007.

This move by Bank of America sets a precedent for how other homeowners throughout the State of California, who’ve been victims of lending abuse by other lenders, can seek a remedy and have their loans modified.